SSE expects £130m first-half hit from pandemic

SSE, the Perth-based renewable energy and electricity networks giant, said on Wednesday it expects a hit of up to £130 million on its operating profit for the six months to September 30 from the effects of the coronavirus pandemic.

SSE said it continues to expect to recommend a full-year dividend of 80p plus RPI inflation. In line with that, and based on RPI of 1.5%, an interim dividend for 2020-21 of 24.4p is expected to be paid in March 2021.

In a stock exchange statement on its first-half strategic progress, SSE said it continues to perform well operationally, making progress with its £7.5 billion investment plan, and reaching financial close for both the Seagreen offshore wind farm and the Viking onshore wind farm in Shetland.

SSE said it continues to develop the world’s largest offshore wind farm at Dogger Bank “with the process to sell an equity stake under way” and confirmation of a contract with GE to supply the ground breaking 13MW Haliade-X turbines for the development.

The Perth company said it sold its financial interests in the Walney offshore wind farm for £350 million and reached agreement to sell its stake in the meter asset provider MapleCo for around £90 million “as part of its plan to recycle £2bn of capital from non-core assets.”

SSE also said it successfully raised hybrid capital securities and conventional euro bonds totalling over £2 billion “meaning SSE has no significant refinancing or funding requirements” for the next two years.

On its financial outlook, SSE said: “As set out in its preliminary results, SSE continues to expect the adverse effects of coronavirus on its 2020/21 operating profit to be in the range of £150m to £250m before mitigation with the greater impacts likely to be experienced in the first six months of the financial year.

“In line with this, the impact on operating profit for the six months to 30 September is expected to be around £120m -130m, none of which will be treated as exceptional. 

“In its Q1 Trading Statement, SSE stated that output from renewable sources was 364GWh, or 15%, below plan for the quarter to 30 June 2020. Output for the year to 21 September was 362GWh (or 9%) below plan. 

“This represents a 3% shortfall on annual output.

“Correspondingly, SSE expects to report adjusted earnings per share in the range 10p to 12.5p for the first half of the year. 

“SSE’s focus is always on financial performance for the full-year and performance in the year to date remains broadly in line with the Board’s expectations.

“With ongoing uncertainties about the shape of economic recovery and the effects of coronavirus, SSE will provide guidance on full-year adjusted earnings per share later in the year. 

“SSE continues to expect to recommend a full-year dividend of 80 pence plus RPI inflation. In line with that, and based on RPI of 1.5%, an interim dividend for 2020/21 of 24.4 pence is expected to be paid in March 2021.”

SSE Finance Director Gregor Alexander said:  “In the face of the coronavirus, which will impact financial results for the half-year, we are continuing to perform well operationally due to the hard work of our teams.

“At the same time, the underlying strength of our business model and our strategic focus on the transition to a net-zero economy stand us in good stead for the future. 

“We are making good progress on both our disposals programme and our significant low-carbon investment opportunities. Seagreen, Dogger Bank and our Shetland investments will create significant value for SSE as well as wider society.”

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Mark McSherry
Dalriada Media LLC sites are edited by veteran news journalist Mark McSherry, a former staff editor and reporter with Reuters, Bloomberg and major newspapers including the South China Morning Post, London's Sunday Times and The Scotsman. McSherry's journalism has also appeared in The Washington Post, The Guardian, The Independent, The New York Times, London's Evening Standard and Forbes. McSherry is also a professor of journalism and communication arts in universities and colleges in New York City. Scottish-born McSherry has an MBA from the University of Edinburgh and a Certificate in Global Affairs from New York University.